lorenzonyc: about 7 years ago

Housing does produce income in the context of not having to pay rent. The growth CAGRs Shiller uses are only for the entry and exit values but ignore the annual cash flow savings of not paying rent. Since his calculations are unlevered (ie don't take into account financing), there is no need to include the financing cost (mortgage), but you do need to give credit for the saved rent, offset by operating costs of a house (real estate taxes).